UK private equity firm cruises into Myanmar as sanctions ease

By Carolyn Cohn| LONDON, July 19

LONDON, July 19 The easing of sanctions in
Myanmar is encouraging western portfolio investors to start
looking at the previously-restricted economy, with one
London-based private equity firm planning to invest in pleasure
cruisers there.

The country of 50 million people is rich in natural
resources such as oil and metals, and its temples and colonial
buildings should attract tourists, but Myanmar has major
infrastructure needs such as for power generation.

Asian firms already have a presence in Myanmar through
direct investment, and a number of Asian private equity firms,
who invest in unlisted companies, have said this year they are
raising funds to invest there.

But sanctions, only recently eased by the European Union and
the United States, have prevented Western investment. With
developed markets increasingly correlated and few stellar
returns to be had, investors are keen for a new avenue.

High-profile commodities investor Jim Rogers said in an
interview last week with oilprice.com that Myanmar was "probably
the best investment opportunity in the world right now",
comparing it to China when it opened up in 1978.

"Myanmar has received a lot of international attention,
there is a renewed effort and focus in trying to get involved in
the country," said Zain Latif, head of private equity firm TLG.
"There is a lot of infrastructure required, particularly in
tourism."

TLG is planning to set up a company operating cruises on the
Upper Irrawaddy river, via a similar company in Cambodia in
which it invests.

The firm, which concentrates on smaller private equity
deals, is going through due diligence at the moment in the hope
that it can start operating the cruises next year, and is likely
to invest a few million dollars.

SEEKING INVESTORS

Hong Kong's Cube Capital and Marc Faber-backed Leopard
Capital are among Asian private equity firms lining up nearly
$500 million aimed at Myanmar, hoping to tap into its rich
natural resources and fill its infrastructure void.

Sanctions were eased by the United States last week and by
the European Union in the last few months following the
completion of democratic by-elections in 2012 -- the country's
first since the military junta refused to accept opposition
leader Aung San Suu Kyi's victory in 1990.

U.S. Secretary of State Hillary Clinton's visit late last
year to Myanmar and Suu Kyi's tour of Europe last month have
sparked interest in doing business in the country, particularly
among large corporations.

General Electric Co. became the first U.S. company to
restart business in the country when it secured a medical
equipment deal with two hospitals in Myanmar a few days ago.
MMeannwhile, the British government's trade promotion body, UK
Trade & Investment opened an office in Yangon this month.

But with no real stock or bond markets, there has been
little to attract fund managers so far.

Julian Mayo, co-chief investment officer at Charlemagne
Capital, who visited Myanmar earlier this year, compares the
country to frontier market Vietnam in the mid-1990s.

"In 1995, there were a number of asset managers setting up
in Vietnam. No-one really made any money for the best part of a
decade," he said, adding that in Myanmar:

"There are going to be a lot of frustrated people hanging
around hotels and looking for something to invest in."

Real estate, tourism and infrastructure are among the likely
favoured sectors for private equity firms, market participants
say, but the country lacks a strong regulatory framework and
there are concerns about foreign ownership laws.

"Operational and strategic risks will remain a challenge for
Western and Asian investors alike," political risk consultants
Maplecroft said in a note. "Reforms will ... be pivotal to
ensure macroeconomic stability in the long term."

Doing business is by no means an easy task. Myanmar scores
1.5 out of 10 on Transparency International's Corruption
Perceptions Index, placing it at number 180 out of 183 in the
rankings.

A foreign investment law to protect foreign investors'
assets and clarify rules for foreign companies operating in the
country is expected to be endorsed by the end of the month.

Naidah Yazdani, general manager of Cambodian cruise firm
Compagnie Fluviale du Mekong in which TLG invests, said Myanmar
needs to prove it is open to foreign capital.

"They have to show a commitment to attract more FDI (foreign
direct investment)," he said. "As soon as that happens, there'll
be investment from all over the world."

LISBON, Dec 9 The Bank of Portugal will not
alter the way it purchases debt under the European Central
Bank's quantitative easing programme following changes announced
by the ECB and will make sure Portuguese debt is bought until
the end of the plan.